UPDATE 1-China AMC plans $1.3 bln QDII fund in Sept -source

(Adds details, background)

By Charlie Zhu

SHANGHAI, Aug 7 (Reuters) - China Asset Management Co. Ltd. plans to launch its first qualified domestic institutional investor (QDII) fund in September to raise 8 billion to 10 billion yuan ($1.06-$1.32 billion), a source close to the plan said on Tuesday.

China AMC, the country's largest mutual fund company, is one of four Chinese fund houses that received Beijing's approval this month to invest domestic clients' money in overseas financial markets under the QDII scheme, aimed at encouraging capital outflows and broadening investment alternatives for local investors.

"The QDII fund we are going to launch next month will mainly buy stocks listed around the globe," the source, who asked not to be identified, told Reuters.

A spokeswoman at China AMC was not immediately available for comment.

The Beijing-based company, whose funds had a combined net asset value of more than 140 billion yuan at the end of June, has hired U.S. asset manager T. Towe Price Group Inc. (TROW.O: Quote, Profile, Research, Stock Buzz) as its overseas investment consultant.

Other fund houses that have received approval are China International Fund Management Co. Ltd., which is JPMorgan's (JPM.N: Quote, Profile, Research, Stock Buzz) China asset management venture, China Southern Fund Management Co. and China's Harvest Fund Management Co., which is 20 percent-owned by Deutsche Bank AG (DBKGn.DE: Quote, Profile, Research, Stock Buzz).

China International said on Monday it aimed to raise $1 billion for its QDII fund, which will focus its investments on financial markets in Asia, excluding Japan and Taiwan.